The accounting identity is best described as:
A) assets = liabilities + equity.
B) Invested capital = debt + equity.
C) net plant and equipment = gross plant and equipment - accumulated depreciation.

Question

Quizplus · Accepted Answer

The accounting identity, also known as the accounting equation, is best described as assets = liabilities + equity. This fundamental equation represents the balance sheet structure, indicating that what a company owns (assets) is funded by what it owes (liabilities) and the owners' claims against the company's assets (equity).

The Accounting Identity Is Best Described As